Utah Tax Commission reports novel-vehicle registrations, raises multiple motor-vehicle policy issues

Jason Gardner, deputy executive director of the Utah State Tax Commission, presented the commission’s first annual report on novel-vehicle registrations and outlined several operational issues the commission asks the legislature or agencies to consider.

The novel-vehicle report is required by statute and documents vehicles that do not clearly fit existing registration categories. Gardner said the commission tends to classify ambiguous vehicles as “novel” as a conservative measure because those decisions can be appealed. Being classified as a novel vehicle generally reduces registration and property tax assessments to token amounts: Gardner said novel vehicles currently are charged a $1 registration fee and a $1 annual fee in lieu of property tax.

Gardner described specific categories flagged in the report. He said a class of tracked sleds sometimes called “snow dogs” previously fit the snowmobile definition but were excluded after the definition was changed to require a seat. Gardner also said “K-class” vehicles — small vans, trucks, and tiny cars with very small engines — are being registered as novel vehicles; he said 231 K-class vehicles were currently registered as novel vehicles.

Committee members asked whether the registered novel vehicles were road-capable. Gardner replied that many are capable of being registered for on-road operation and noted that the novel designation affects the fee structure rather than whether the vehicle may be driven on public roads.

Gardner said the purpose of presenting the report is to put the issue before the legislature: the committee may decide to keep those vehicles classified as novel, exempt them from registration entirely, or place them in a regular registration category (and set fees). No committee vote on classification was taken at the meeting.

Gardner then reviewed a series of operational matters the commission is tracking and may seek legislative cleanup on. He described problems from modern, printed license-plate materials that have a shorter useful life than older embossed plates. Those printed plates can degrade after repeated transfers between vehicles, becoming nonreflective or illegible. Under current statute the modern plates may be transferred between vehicles, and Gardner said the commission is considering whether to impose limits on transfers or require remanufacture after a certain number of years. He said the commission wants to run public service messaging to warn buyers and sellers in private sales to confirm title transfers so registration and citations do not remain in a prior owner’s name.

On specialty plates, Gardner recommended stopping new issuances of a “special interest” plate category that has no charitable contribution attached. He said the existing statute permits plates for vehicles 20 years or older or for makes or models the division director recognizes as having historic value; the commission finds the director-based determination impractical and subject to appeals for a low-value plate.

Gardner identified a statutory ambiguity about impound-yard fencing. Current commission practice has treated “highway” in the fencing statute to mean state, U.S. or interstate highways, but a broader statutory definition of “highway” could require opaque fencing along many more local roads. The commission asked the committee to be aware that a stricter statutory interpretation could impose costs on private impound operators.

On the fuel tax, Gardner said the statute calculates the fuel tax using a statewide average rack price but does not define the set of racks to use. Historically, the calculation used two racks (Salt Lake City and Cedar City). A new small rack in Cisco was recently established; Gardner said including that rack in the statewide average could skew long-range forecasts and recommended clarifying which racks should be included.

Finally Gardner reviewed the state’s electronic-title rollout. Legislation requires electronic titles for dealers by Dec. 31; the commission said dealers commonly keep trade-in paper titles on the lot for convenience and to avoid a $6 title fee when not actually titling into the dealership’s name. To preserve a clear electronic chain of title the commission asked the committee to consider an exemption so dealers can title trade-ins electronically as inventory without being charged the standard title fee, arguing the exemption would encourage dealer adoption of electronic titling.

Committee members asked follow-up questions on each item. Several members suggested dealer and plate reforms could be incorporated into forthcoming committee bill files the commission intends to bring. The committee took no formal action on the update during the hearing.